Steps to Getting a Mortgage and Buying a Home
Preparing to Buy Your First Home
- Start saving for your down payment and closing costs. Make sure to check your credit score and your debt-to-income ratio, too.
- Decide what type of house (condo, duplex, single-family) is right for you and which features are a NEED vs. a WANT (neighborhood, location, etc.)
- Determine your budget by analyzing your expenses and working with a mortgage lender. Check out our mortgage calculators, too!
- Take into consideration the monthly costs for a home – loan principal, loan interest, private mortgage insurance, property tax, and homeowners’ insurance.
- Gather necessary paperwork for the loan-application process, including tax returns, pay stubs, bank statements, and investment information.
Submit your online pre-approval application before placing an offer on a house to show you are a serious buyer. We will run a credit check, review your income and determine mortgage loan options that are right for you.
Now that you have initiated a home loan application, you will want to be careful about financial events that could impact our ability to approve your loan. Specifically, you should contact your lender concerning any of the following:
- Changes to your income.
- Acquiring additional debt.
- Shifting funds around.
Once pre-approved and it comes time to make an offer on a home you will be armed with a pre-approval letter that gets noticed. Your pre-approval will be from one of the most credible lenders in the area - Lake Ridge Bank - and that means something.
Finding Your Home
For the home inspection, make sure to follow up with your realtor on any unacceptable findings.
It's Time to Close on Your First Home
To close on your home, work with your lender to update your application as needed, and to provide any additional documentation required for your loan. Your lender will then schedule a home appraisal to determine the property's fair market value. Together, you both will confirm a closing date and finalize loan details, including private mortgage insurance, if applicable. Be prepared to pay fees associated with closing, such as attorney fees and lender fees. Once the closing is completed, your new loan request will be funded and it's time to enjoy your new home!
In addition to the upfront costs, you will have a monthly payment for your mortgage that can be broken out into four parts:
- Principal: The principal is the actual money you borrowed and need to pay back.
- Interest: Interest is part of your monthly payment and is one of the costs of borrowing money.
- Mortgage Insurance: Mortgage insurance is only required for individuals who pay less than 20% for their down payment. This part of your monthly payment is also part of the cost of borrowing money.
- Property Taxes & Homeowners' Insurance: These monthly costs are not a result of borrowing money, but of being a homeowner. You will typically have these grouped with your monthly payment which is managed by your mortgage lender through an escrow account. Additional monthly payments you may need to pay for include condo or homeowner's association fees. These, however, are separate from your mortgage monthly payment and vary depending on your type of residence.
Depending on your situation, we can offer flexibility in terms of how much you must place toward your down payment. Your mortgage lender can help you identify assistance programs for first-time home buyers, as well as understand all your options for private mortgage insurance and other considerations.
Your credit score is one of the most influential pieces of your financial history, and a good score can help you qualify for a better rate. Your lender can help you understand how this works and get you ready for running your credit score, when you are closer to finalizing your mortgage application.
It’s important to know in advance what type of mortgage payment makes sense for your financial situation and budget. Your mortgage loan officer can help you determine this as part of our pre-approval process. Check your credit score and your debt-to-income ratio, too.
The three basic types of mortgages you can receive are fixed rate, adjustable rate (ARM), and jumbo loan. Learn more about these mortgage loan options and which one may be right for you.